Know about few important types of mortgage loans
A wide variety of mortgage loans are available at the market place. Depending upon your income, employment, credit history and of course requirements, you need to select your mortgage loan. Anyways, your mortgage loan should be such that you are able to make monthly payments on mortgage. In order to know about the monthly mortgage payment, you can also take the help of a mortgage calculator. This actually helps you make the decision regarding the selection of a particular type of mortgage loan. Here we discuss about different types of home mortgage loans.
Fixed rate mortgages
This is perhaps the oldest type of mortgage loan. The rate of interest associated with a fixed rate mortgage (FRM) is fixed. In other words, the monthly mortgage payment amount remains fixed throughout the term of the loan. FRMs can be of 10-year, 15-year, 20-year or 30-year duration.
Adjustable rate mortgage
Another popular type of mortgage is the adjustable rate mortgage (ARM). The mortgage rate on an ARM varies with the market rate of interest. The initial rate of interest on an ARM is set below the market rate on a comparable fixed-rate loan. Thereafter the rate rises as time goes on.
FHA loans
These loans are backed by the federal government and issued by private lenders. FHA loans have become very popular in the country as the requirements to obtain these loans are relatively easy. Your FICO score does not matter much while obtaining these loans. Down payment requirement is also less. Because of relatively easy eligibility criteria, FHA loans are most suitable for the first time home buyers.
VA loans
These are government loans and these are backed by the Department of Veteran Affairs. These loans are offered by the conventional lenders. These loans are available for the people who have served the US Armed Services and for the spouses of the deceased persons who had served the armed forces. One important advantage of VA loans is that no down payment is required for VA loans.
These are some major types of home mortgage loans. Apart from these, there are many other types of loans in the market place. Anyways, before taking out a home mortgage loan, you need to ensure that the mortgage loan is affordable to you. Out of the excitement to own a house, you should not overbuy. And, once you have already taken out a mortgage loan, you have to make sure that you make regular payments.
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